Governance and Global Affairs Blog

President Trump, the government is not a business

President Trump has called for reforms to run government as a business to improve its efficiency. However, government and business should not be run in the same way.

President Trump wants to improve the efficiency of the American federal administration by having the government function more as a business. To this end, the ‘White House Office of American Innovation’ has been established, under supervision of Trumps son-in-law and top advisor Jared Kushner. In a statement, Kushner said: “The government should be run like a great American company. Our hope is that we can achieve successes and efficiencies for our customers, who are the citizens.”

Improving government by looking at private companies is certainly not a new idea. Since the 1980s, this idea has surfaced many times. In the 1990s, vice-president Al Gore distilled ‘common sense lessons’ from American corporations. The idea that government should be run more as a business resonates with negative stereotypes that depict government as inert, sluggish and bureaucratic. It is not surprising that this idea receives attention during the presidency of Trump. During the election campaign, Trump emphasized his successes as a private entrepreneur. Moreoverthe idea to treat government more like a business fits Trump’s general aspirations of deregulation.

It is important to be critical about the performance of government organizations, and it is the responsibility of politicians and public managers to continuously look for ways in which the performance of government can be improved. Other Western countries, including The Netherlands, have repeatedly tried to learn from private businesses: less rules, less civil servants, and more smart application of ICTs.

It is remarkable that the United States – call it chauvinism – tends to focus exclusively on learning from American corporations. Regardless of this domestic focus, a crucial mistake in this endeavor is that the characteristics of successful businesses may also apply to unsuccessful businesses. Selecting examples on the dependent variable (success) is therefore no fail-safe way to identify ways to improve performance. In addition, many of the companies that were selected by Al Gore as excellent examples have been split up or discontinued (Motorola and Saturn), stagnated (Xerox) or have even received a government bailout (Citibank). Finding successful companies to learn from may not be as easy as it sounds.

Trumps innovation agency sees innovations from businesses as an antidote for the lacking efficiency and rigidity of the American administration. Apart from the question if government is truly less innovative than private businesses – the most important innovations of the previous century all come from public organizations: the internet, nuclear power, spaceflight – I would say that it is an illusion that government can be improved simply by mimicking businesses. Businesses do not have better managers or better ideas, but the rules of the game are far more complex for government organizations.

This touches upon a fundamental problem with Trumps policy: the comparison between government and businesses is not straightforward. Kushner states that he sees citizens as the costumers of government. But a citizen, in contrast to a customer, can in many cases not decide if and by what government he wants to be served. Moreover, a citizen is not only a customer, but also a co-producer, subject and even owner of government. In addition, businesses are able to choose their market. They decide for themselves what products or services they sell, and to what customers. In contrast, the government solves problems that no one else is willing or able to solve. Indeed, the government often cleans up the mess that is left behind by businesses. Running the government as a business is like playing a game of chess with the rules of checkers. The two may seem alike in many ways, but in reality they are completely different games.

Because of multiple interests and complex tasks, the government sometimes comes across as chaotic, irrational and inefficient. But these chaotic processes also ensure the necessary bureaucratic and democratic checks and balances. As professor Sandra Groeneveld discussed in her inaugural lecture about the relevance of bureaucracy: a bureaucratic administration has important advantages in terms of predictability and accountability. Good administration is not about optimizing efficiency, but is about continuously balancing efficiency with equity, due process, resilience and responsiveness.

It is too early to say how Trumps innovation bureau will behave in practice. Will it be a repetition of earlier policies by importing private ideas to the public sector and privatizing public tasks to the private domain? Or will it be a more contemporary approach by improving information exchange between government and businesses, increases public-private collaboration, and increasing labor mobility between the public and private sector? Going by Trump’s first months in office, I think that the former will be most likely. My expectation is therefore that Trumps America will not only go back in time in the areas of health care, energy and climate policy, but also in the area of public management.